SC Launches Third Capital Market Masterplan To Guide Malaysia's Capital Market Growth
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The Securities Commission Malaysia (SC) has launched Malaysia’s third Capital Market Masterplan (CMP3), which is expected to serve as the blueprint for the country’s capital market trajectory between 2021 to 2025.

According to the chairman of SC, Datuk Syed Zaid Albar, CMP3 will continue the progress that was achieved in the last two decades through Capital Market Masterplan 1 (2001-2010) and Capital Market Masterplan 2 (2011-2020). The latest masterplan now seeks to leverage on the strengths and potential of the Malaysian capital market to achieve economic growth that is both sustainable and inclusive.

“Malaysia is now at a critical juncture in our post-pandemic journey. It is imperative for the capital market to continue to support the economy as we transition into an inclusive and sustainable nation. The progress in the capital market cannot be measured solely by growth and size as it also has to serve underlying needs and aspirations of the country and its people,” said Datuk Syed during the virtual launch of the CMP3 today.

Essentially, the CMP3 aims to steer Malaysia’s capital market towards three desired outcomes: to be relevant, efficient, and diversified. It will rely on six key development and regulatory thrusts to guide the drafting of strategic initiatives over the next five years.

Aside from revealing the six key thrusts, the CMP3 also highlighted some priorities and aspirations that it hopes to address over the next five years. One key matter that was brought up is the demographic change and retirement dilemma that Malaysia faces as an increasingly ageing society, with people aged 60 and above expected to make up 15% of its total population by 2030.

In light of that, the SC noted that the Malaysian pension system will see significant pressure to generate high returns from existing savings to meet future retirement needs. This is following the expectation of lower asset returns moving forward, as have been experienced by global pension schemes over the past decade.

“The search for returns may drive retirement schemes towards investing in riskier alternative assets on behalf of their members or lead to members demanding to withdraw and invest their retirement savings in other instruments that offer better returns,” said the SC, adding that the situation has been worsened by Covid-19. Additionally, an estimated 40% of the Malaysian population is deprived of any form of social protection, while many under the formal retirement system may face insufficient funds when the time comes.

If left unresolved, the growing gap between retirement savings and actual needs could cause a drag on the economy in the coming decades, especially as the government will need to intervene to close the gap. As such, it is crucial for the shortfall to be addressed before it snowballs into a more serious threat.

Another matter that the CMP3 brought up is Malaysia’s ambition in becoming a high-income nation. According to the report, Malaysia will transition into a high-income nation over the next decade, despite headwinds caused by geopolitical factors and the global response to Covid-19.

This journey will be underpinned by numerous other strategies on top of the CMP3, including the 6R National Economic Recovery Plan that was announced in May 2020. The strategy is comprised of six phases: Resolve, Resilience, Restart, Recovery, Revitalise, and Reform. Malaysia is currently in the Revitalise stage, and is expected to enter the Reform phase soon.

Aside from that, the country will also rely on the Malaysia Digital Economy Blueprint (MyDIGITAL) and the 12th Malaysia Plan (12MP) to drive the transformation. The MyDIGITAL blueprint was launched earlier in 2021 to guide the expansion of Malaysia’s digital economy, whereas the 12MP is set to be presented by the end of September 2021.

Other subjects that were also raised in the CMP3 include steps to provide Malaysians with better access to investment through greater use of technology, SC’s commitment to adopting principles-based regulations more extensively, as well as the development of a framework to regulate technology risks.

(Sources: Securities Commission Malaysia, The Edge Markets)

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